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Islam provides a complete system under which a person could lead his life in a prosperous way. It's teachings are fine tuned with materialism and spiritualism. There is a balance maintained between these two separated worlds. It provides a model for the individual as well as society.
Over the years islamophobia has been deliberately used to skew its teaching and its insistence on equality and justice. Even though political Islam is hated in non-muslim countries, there is little attention on economic teachings of Islam that could lead to prosperous lives. For over thousands of years, man has failed to solve economic problems of his society.
In the19th and 20th century wars were, common. The deaths in these wars took a heavy toll. These two centuries also highlighted the mismanagement of global and local economies. Open an Economics book, a bold reference is always made to 1930's economic depression, stagflation of 1970's, financial crisis of 2008 and Greek debt crisis. The reasons for these recurrent crises have been unlimited greed, and unregulated markets, loose monetary policy and inequality.
Even though the comparison between global wars and economic crisis would seem an exaggeration for a person unacquainted with economics, yet it is an established fact that economic problems prove costlier than wars. These costs are direct as well as indirect and continue to follow inter-generational patterns. Despite the constant threats posed by these fragile economic systems (Capitalism and Communism), it has not initiated a discourse on the other existing economic alternative setups (Islamic economic system). The world shuld have debated the other alternatives after the recession of 2008 and now the Greek debt crisis.
The global economic system, despite all attempts has failed According to the United Nations Food and Agriculture Organisation a staggering 805 million people of the 7.3 billion people in the world, or one in nine, was suffering from chronic undernourishment in 2012-2014. Almost all the hungry people, 791 million, live in developing countries, representing 13.5 percent, or one in eight, of the population of developing countries.
There are eleven million people undernourished in developed countries. UNICEF estimates that 22,000 children die each day due to poverty. And they die quietly in some of the poorest villages on earth, invisible for the rest of the world.
Inequality is the issue that has destroyed the legitimacy of these systems. Based on the principle of "survival of the fittest' this economic system has been more humane to wealthy and prosperous than the poor and downtrodden. Almost half the world--over three billion people--live on less than $2.50, and 80 per cent of the world population lives on less than 10 dollars. The poorest forty percent of the world's population accounts for 5 percent of global income and the richest twenty percent accounts for three-quarters of world income. Environment has also been worst hit. There have been sharp decline in forest resources, quality of water, and some species have become extinct throughout the world. Materialism has been the bedrock of these problems.
Islam provides a system that promises to alleviate the current economic problems of the world. Based on rules of Shari'ah, it stresses justice and equality for all. The central concept in Islamic banking and finance is justice, which is achieved mainly through the sharing of risk. Stakeholders are supposed to share profits and losses, and charging interest is prohibited. Its modern history dates back to the 1970s, with the launch of Islamic banks in Saudi Arabia and the United Arab Emirates although its roots stretch back to the time of the Holy Prophet (SAW). It has been tried in the past and has given positive results. In fact, some countries have also taken note of its contribution to the world economy.
The surprise came from none other than the prime minister of England, David Cameron. He is on record to have said that he wants to see London as "one of the greatest center for Islamic finance anywhere in the world". He also unveiled a plan from the treasury to issue an Islamic bond - or Sukuk - worth around £200 million. He must have seen how well these bonds fared even in the tough times of global economic crisis. A study by economists Jemma Dridi and Maher Hasan of the IMF's Monetary and Capital Market department showed that Islamic banking has shown much resilience during the global financial crisis than conventional ones. Islamic finance has been the fastest growing segment in the financial sector of the world. It is now too big to ignore. At the end of 2008, some $208 billion were under its sway. The largest Islamic banks are located in middle-east countries. It is a surprise for many that the policy makers at international level are still finding solutions to problems by conventional methods. Greek crisis is the finest example for it. One after the other crises have struck consistently, and Greece is the latest one. Many people don't seem to realise that why Greece is constantly under pressure in spite of the two bailouts. The bailouts have been more than $240 billion euros. So where is the money going? The bailout money mainly goes towards paying off Greece's international loans, rather than making its way into the economy. And the government still has a staggering debt load that it cannot begin to pay unless a recovery takes hold. Its debt is still more than 100 percent of GDP and its unemployment at a staggering 25 percent.
The "world debt clock" is ticking forward. It is now about 56,604,725,605,746 dollars. The global economic systems have been at war with humanity and invisibly making their lives harder day by day. Debt has been the fundamental problem facing human society today, it is exactly why Islam prohibits it. If the interest rates, in whatever form, are eliminated there will be a sharp rise in prosperity and employment levels. In fact, the developing and under-developed countries are worst hit by interest and debt problems.
It is time to think about the economic system which provides better results. It has a human face associated with it that constantly stresses justice, equality and free access to all. It balances the material and spiritual aspects of life. Islam emphasises distributive justice and lends unqualified support to weaker sections of society, it condemns the arrogant ruling classes that suppress the weaker sections through visible and invisible methods. Given a chance Islamic economic system will prove its mettle as it has always done.
© Business Islamica 2015
